Understanding word-of-mouth in the digital age

Word-of-mouth is not new. People have always talked about their experiences, emotions, needs and also products, services and brands. With the arrival of interactive and social media the patterns, role and impact of word-of-mouth have evolved and new, forms of online communities were shaped. These changes affected the ways businesses can leverage the power of word-of-mouth for marketing purposes and, vice versa, the impact of word-of-mouth on businesses.

This brief offers an introduction to word-of-mouth, analyzes what it is, how it works, why it works, how it is linked with social (media) and what are the main benefits to get started with the most effective form of marketing a customer-centric and participative business has: word-of-mouth marketing. Warning: while you are reading this someone is talking about your business.

Word-of-mouth happens all the time and everywhere

People communicate in many ways: from face to face interactions to telephone calls and writing letters or exchanging opinions via email, blogs and so on. The customer talks across all possible channels and is increasingly becoming channel-agnostic. People “talk” and exchange thoughts and opinions about many things: the weather, their children, their health, the news, other people, the latest gossip, their feelings, recent events, the good old days, you name it.

Although concepts like ‘brand’ and ‘marketing’ have only recently been introduced into our way of thinking and language, people have also discussed products and brands with others for many centuries and they still do. Think about it. How often do you discuss a purchase, ask for advice or just share your experiences with a company or product? You are then doing exactly the same as for instance medieval citizens that were talking about the products that were displayed on the weekly market. These days, people even talk about marketing and advertising: “have you seen that cool xyz commercial?”.

Word-of-mouth occurs everywhere people get together: at the local pub, at home, in the sports club and increasingly online and on social media. And there are many reasons why people like to talk about their experiences with products and brands. These experiences, brand experiences and individial customer experiences, as well as overall opinions regarding perceived levels of overall customer experience, customer service, satisfaction, etc. are shared and often have a very personal and subjective nature. But they increasingly happen in a very public space: the social Web. They occur, whether we like it or not. They can have a positive impact on our brand or hurt it.

In the social media age word-of-mouth can travel fast, very fast. The scale, speed and real-time nature of the social Web and the increased possibilities for people to share and express themselves play a crucial role in this.

The fact that word-of-mouth is so important online is one of the reasons why businesses must be active in social media marketing and in social content marketing. They need to listen to what is being said about them, their market and competitors. They need to learn from what they “hear” and also respond when necessary. They have to, as the expression says, “join the conversation”.

However, word-of-mouth and a defensive attitude to try to “protect our brand reputation” is not the main reason to get involved.

The main reason is the fact that our prospects and customers use social media and that word-of-mouth is an incredibly rich source of information in the form of unstructured data and tangible input, interaction possibilities and so on to help us in improving our overall communication strategy and increase customer satisfaction. Word-of-mouth is an opportunity for every business with possibilities that go far beyond the obvious and are only limited by our imagination. Brand advocacy is one of the most underused drivers and results of word-of-mouth.

In the broadest sense, word-of-mouth marketing encompasses among others:

Monitoring what is being said for marketing purposes

Engaging in brand- and product-related discussions

Setting up communication strategies whereby the natural word-of-mouth phenomenon is being “used” and “enhanced”

Identifying influencers and people who can be involved in sharing our stories

Viral marketing and activities to generate “buzz”

Involving people and their social networks for all possible marketing goals

In practice, most marketers talk about viral marketing, influencer marketing and referrals when thinking word-of-mouth marketing. They see communities, people like you and me, influencers, loyal customers and social network users as extensions of their sales and marketing force. However, this should not be the main focus. The key elements of successful word-of-mouth marketing are about value, relevance, excellent customer service, content and stories.

And listening to stories is just as important as having them shared. Word-of-mouth marketing requires a customer-centric mindset of sharing and focusing on what is valuable for the people and networks we hope to involve. It’s certainly not about paying people to “get the word out” nor about simply “joining the conversation”. It’s about perceived and real value, both for our business and our customer and prospects.

Conversations as such have no business value if they don’t focus on mutual benefits and are not monitored, measured and used to improve the overall customer experience and efficiency of our cross-channel marketing strategy.

Word-of-mouth marketing in a connected world: the link with social media

Word-of-mouth marketing, which encompasses a variety of subcategories, including buzz marketing, blog marketing, viral marketing, referral marketing, influencer marketing, etc., works and integrates well with all channels, media and forms of online marketing, including “more traditional ones” such as email marketing.

Word-of-mouth marketing is a connected phenomenon, that also includes offline marketing. This is natural, give the fact that people increasingly use various channels as well and their sharing, information and even buying behavior is very complex and integrated.

Marketers find out every day that combining word-of-mouth and peer-to-peer programs and activities such as customer reviews, social media related WOM activities, referral marketing etc. leverage the global impact of their marketing efforts. The same goes for having an integrated and holistic view on the customer and interactions with him in any case (customer-centricity).

People are easier influenced by family members, friends and people that they know and trust. In this social media age they even rely upon the advice of complete strangers. This also applies to pre-purchase advice and brand information.

WOM is and remains an offline matter but it is clear that the rising success and the increasing attention from marketers has a lot to do with the emergence of the digital media, and in particular social media. They are the carriers of people’s voices, brand and product messages and viral marketing efforts. To get “carried”, all you need are the right stories.

Word-of-mouth marketing does not only involve products, brands and companies. Firstly it involves experiences and interactions, including with companies: experiences with businesses and products are talked about. And, whether they are ‘justified’ or not: there is nothing you can do to get around this. Every individual contact with a company, and therefore with every employee of that company, influences brand experience and customer experience perception and thus plays an important role in WOM marketing.

Valuable contact moments and touchpoint interactions, customer service excellence and offering a customer-centric experience are more important than ever. Word-of-mouth leads to new customers, shortened sales cycles, improved branding and much more. Implementing a client-oriented business philosophy across all divisions is key.

With the emergence of social media, which gives the stories and opinions of people a faster and larger reach, WOM has become a more complex matter for marketers. Communication is much more fragmented and appears to be more uncontrollable than ever before.

But at the same time the revolution in communication between people and people (businesses are composed of people) has opened many doors for marketers who tactically exploit new media to efficiently use WOM with unseen and exponential results.

On top of this they will also see that WOM can be better influenced, measured and even controlled than before, despite the fact that people and therefore also clients increasingly control communication and the buying process.

One of the components of a word -of-mouth marketing action is often identifying people with an influential voice on a specific topic, including for example bloggers. It is also important to know who is positive about your brand and could be a potential brand advocate. Through analyzing what happens on social media you can also see which users your should best aim your campaign at and also who has the most influence. Through ‘social media listening’ you can identify existing fans of your brand whose opinion people seem to trust. You can reach these people as a brand via social media.

In other words: although WOM happens everywhere, there is a clear link between social media and word-of-mouth. Notice: social media marketing is not a replacement for WOM in the digital age, as some people claim.

Why people participate in word-of-mouth

We know that people discuss products, brands and services with one another. A more fundamental question is why people do this. One answer to this question will quickly indicate that there are people who ‘participate in WOM’ far more than others and that you can even split them into different types. An important question is why people participate in WOM. There are many reasons but the main ones are certainly psychological.

Some reasons people ‘participate in WOM’

Social acceptance and recognition. People like to feel like they ‘belong’ to a social group. They like to contribute in a relationship. And another step further, they long for recognition and appreciation. One of the most important psychological motivations why people share their product and brand experiences with one another involves supplying a positive contribution to the social circle(s) to which they belong. This is an important element for marketers who want to make optimal use of WOM.

Distinction. People do not only crave social acceptance, often they also want to differentiate themselves within the “tribes” they belong to. They do this by discussing their unique experiences or the products that they have purchased. The latter can take the form of what one would call ‘bragging’. WOM can also be driven by the need for distinction and … on jealousy on other.

Eradiating knowledge and authority. Some people like to think of themselves as specialists in this or other matters. Think of the cousin who knows everything about computers, the friend who is an expert in culinary expertise. These people are very important sources of WOM if their specialization or expertise is acknowledged by another. Their expertise and authority after all makes them reliable sources of information in the perception of the people they know. If their experience is proven or based on a job such people can also be real ‘thought leaders’ for a larger network. Think of the email marketing specialist who spreads his experiences blogging away.

The urge to do good. We all like to make someone else happy. In that case it often involves more than the social acceptance and recognition from the first point but also the pure pleasure of having done something good for another person. This pleasure we continue to seek in the spectacular deeds. Offering a positive recommendation to someone a regarding a product or service gives us a feeling of having done well if the person is also effectively helped by this.

Sharing experiences. A large part of human communication is informative: we discuss things that have happened to us. The other person responds to this with his/her experiences, etc. Products and brands are often mentioned in these discussions: amusement parks we have visited, restaurants or shops where we have been, products that we have purchased. If people link positive associations with these products and brands it is also registered in this way by others.

These are surely not the only reasons why people share and distribute product and brand experiences with others but they are very important to remember.

If you read these motivations carefully you will quickly note that there is a crucial aspect that arises that ensures that people discuss brands or distribute brand messages: the WILL to do so. This has important implications on the levels of initiating WOM actions.

Now that there are so many ways to satisfy all these psychological and communication needs there is an enormous increase in the number of ‘discussions’ between people.

Some benefits of word-of-mouth marketing

I just explained how word-of-mouth and social media are connected and how the attention WOM has always received from marketers, has now increased even more by the success of social network platforms.

The emergence of the network economy, the focus on the client and the explosion of the ways in which we can satisfy our psychological WOM motivations (recognition, social acceptance, sharing, distinguishing oneself, radiating authority, doing something good for someone else, etc. ) also play a role.

Here are some of the main benefits of WOM.

WOM is customized to the digital network society.
Word-of-mouth marketing is an extremely powerful marketing instrument. It has an exponential effect that is strengthened by the online communication channels and the consequences of the network economy. WOM leads an own life that is linked to the scale of the networks. The rise of online media and communication means has markedly increased the speed in which messages are shared. At the same time the cost is often much lower than that of other forms of marketing and the ROI better.

WOM presents a powerful answer to modern marketing challenges.
The explosion of media and the changing consumption thereof have made the marketing-communication reality a lot more complex. Consumers are exposed daily to an abundance of advertising messages while the impact of conventional communication is simultaneously dropping. The fragmentation of the communication landscape is however also one of the most important feeding grounds for WOM and therefore generates a significant response to all these challenges.

WOM is an answer in the client-oriented economy.
In a discussion you personally decide who you want to talk to. Word-of-mouth occurs between people who personally determine what they want to share, for instance important in viral marketing, and who to believe in order to acquire information, opinions etc. in their buying journey. The impact of a recommendation from a reliable person, like a friend, is much stronger than that of an advertising message of a biased source, namely a company. The message in WOM is per definition customized for the consumer. After all, we talk to others about the product that we are interested in at the moment, otherwise we would be asking for advice. Take note that people talk about things that interest them, that they are passionate about etc. So if you want to generate a WOM-campaign, you will have to ensure that his message is interesting.

WOM is/appears reliable.
This coincides with the previous, but is crucial. The advice from friends is much more reliable in the consumers’ perception than that of a seller or marketer. Since people participate and personally create media, amongst other via blogs, you get a new group of opinion leaders. It is obvious that identifying these opinion leaders is an important job for the marketer. Working with opinion leaders is for that matter not only a prerogative of online WOM. It has been implemented successfully in numerous sectors for many years.

WOM can be managed.
Word-of-mouth marketing cannot be controlled, it is not an exact science. Most of it escapes your control possibilities because of its interpersonal and restricted controllable character, in contrary to classic communication monologues that can still be seen in conventional mass media. But that WOM is uncontrollable, doesn’t mean that you cannot initiate and even manage it more than you might suspect.

WOM accelerates the purchase process.
In his book ‘The secrets of word of mouth marketing’, George Silverman casted a new light on marketing. His statement is that all forms of marketing, advertising and communication should actually be considered possibilities for generating WOM. Silverman doesn’t imply that other, classic ways to see marketing are senseless. He simply suggests looking at everything from the WOM-point of view, which provides some interesting insights if you do this exercise. One of them is that WOM considerably accelerates the decision process in the area of purchases, amongst others through the trust that consumers have in the person that they are talking to. Silverman states that the acceleration in the purchase process is a direct route to more sales and that this is exactly where WOM gets its strength.

Word-of-mouth marketing, communication and content: the importance of stories

To conclude this brief, here are some general content- and channel-related word-of-mouth marketing aspects to keep in mind. As I said before, WOM works very well in a cross- and multichannel environment but to have something that gets carried over these channels the first thing you need obviously is content.

Next there has to be communication with several “target groups” in a smart planned way and of course people have to have an incentive to share and preferably find the content, communication and message share-worthy as such.
Is there a difference between communication and storytelling? Certainly. A simple ‘hello’ two people exchange when they meet each other is communication. However, it is not a story.

Word-of-mouth shortens the buying process (speeds up the decision process)

People are storytellers. And that has its anthropological, cultural, sociological and historical reasons. As you know, the spoken language developed earlier in history than the invention of ‘writing’. Ancient cultures were therefore, obliged to pass on their religious practices, their history and so on to their offspring by telling stories.

In some cultures that tradition of passing on stories orally is still present, although they are now often written down too.

We are storytellers by tradition but also because only a good story is worth telling and passing on. The conclusion for marketers who want to use the power of word of mouth marketing is simple: they should be good storytellers too.
WOM is definitely not just a matter of communication, networking and so on, it is still primarily a question of a good and, in the case of marketing authentic, relevant and honest story that the ‘audience’ really wants to pass on.

Regardless of the medium and the format. What once used to be oral and written storytelling is now multimedia and multi-channel.